Competing for growth
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How business is growingbeyond boundaries
Transcript of Competing for growth
- 1. Competingfor growthHow business is growingbeyond boundaries
- 2. In this reportExecutive summary how business is growing beyond boundaries 2New markets how high-performing companies are approaching 4rapid-growth marketsNew products and services how high performers are innovating 16for successNew talents and skills how high performers are capturing and 26retaining the talent they needAbout this report 36The benchmark findings for this report are drawn from two studies conducted betweenJanuary and February 2011 in parallel for Ernst & Young by the Economist IntelligenceUnit. To explore what companies were doing as they entered new markets and innovated,we interviewed some 400 C-suite and marketing professionals. To explore how companieswere addressing talent management, we interviewed 400 C-suite and HR directors. Aswith our earlier study, we have factored out the impact of sector and distinguishedbetween the top third highest performers in both revenue and EBITDA growth and thelowest third to see if we can identify distinctive patterns of action that might explain thesuperior performance.
- 3. The new economy is more competitive than the old.Greater variation in market performance, sharpermarket volatility, ceaseless pressure on marginsand demanding stakeholders have made for anincreasingly interconnected and interdependent global economy.In our first Competing for growth report, we interviewed some 1,400 companiesfrom around the world to see how they were responding. Our study showed thatsuccessful players the top quartile in both revenue and EBITDA growth havefocused on executing four drivers of competitive success: Customer reach to optimize their potential market Operational agility to maximize their effective response Cost competitiveness to optimize their profitability Stakeholder confidence to secure both talent and support for achieving their goalsThis report seeks to test and build on these findings, by exploring how the drivers ofcompetitive success are being applied to the three fundamental sources of organicgrowth: entering new markets, creating new products or services and developingthe new skills required to deliver enhanced, or cheaper, offerings.By digging deeper into what successful companies are doing, we can draw insightand offer guidance on how they are achieving their success. Broaden product/ Prioritize service offer markets Focus on Reinforce key segments brand Customer reach Accelerate Inform speed of response pricing process Create exible work/delivery High Sustain cost reduction platforms Operational performers Cost agility competitiveness do better Master Pass on innovation on cost pressure Improve Optimize collaboration capital Stakeholder condence Identify and Re-engage with explain risks internal talent Enhance Anticipate reporting regulatory complianceFor each of the four drivers customer reach, operational agility, costcompetitiveness and stakeholder confidence higher performers have adopteda distinctive set of actions, or have made further progress, in implementing eachprogram. Competing for growth How business is growing beyond boundaries 1
- 4. Executive summaryHow business is growing beyond boundariesThe Competing for growth model is an effective framework to help management understand its comparativeposition in responding to the new economic reality. The challenge is great, but competitive success is morelikely for those companies that achieve the optimal balance between their customer reach, operationalagility, cost competitiveness and stakeholder confidence.Our most recent research has reinforced our belief in the value of resonates in the market and with both internal and externalthe framework. Its application can be seen to drive high stakeholders. For positioning, like market leadership, is a toolperformance in achieving profitable and organic growth from the rather than just a goal. It is the result of management action andthree core sources: can be changed. By studying the actions of others, management can be better placed to improve their own position.In new markets For the purposes of our research, we have treated the threeHigh performers approach new markets through a deep sources of organic growth as separate, but in reality, they overlapunderstanding of their target customers. They have broadened the into a suite of connected opportunities and challenges. To growrange of their products and developed them close to their markets successfully, companies need to look beyond these boundariesto better meet their needs. They move pricing as close to the indeed way beyond their own current boundaries to identifymarket as possible and as much under their control as possible. their future path.And they take their stakeholders with them through clear andspecific communication about both markets and challenges. Going forward, Ernst & Young plans a number of future studies to drill down further into the global growth agenda.In product and service innovation marketsHigh performers approach new product and service development Newfaster and closer to the market so that they can get further up thevalue curve and secure better prices for their efforts. They achievethis performance through more inclusive innovation approaches Customer reachthat extend beyond product development. And they take theirstakeholders with them by sharing more detail on the potential oftheir innovation and the progress they are making with it.In talent management Operational Cost agility Growth competitivenessHigh performers approach their talent resources with the same New printensity that they approach their customers. Successfullyaccessing wider groups allows them to build the diversity that they tsneed. Recognizing that their talent is an asset to protect, they odu lenselect carefully and pay more to retain while recognizing that payis only part of the implied contract that such talent demands. Stakeholder ct